A scandalous Homeland Security program that allocates well over half a billion dollars annually to help high-risk urban areas protect against terrorism is plagued with rampant fraud, waste and abuse that’s laid out in a scathing federal audit this week.

Known as the Urban Areas Security Initiative (UASI), the program provides funding—more than $660 million in 2011—to address the unique planning, organization, equipment, training, and exercise needs of high-threat, high-density urban areas, according to the Department of Homeland Security (DHS). This is done by assisting those local governments in building an enhanced and sustainable capacity to prevent, protect against, respond to and recover from acts of terrorism.

An example of how this innovative program is failing can be found in a Homeland Security Inspector General report made public this week by the agency’s watchdog. It focuses on $45 million in UASI funds allocated to Chicago’s Cook County in the last few years to enhance public safety. Local authorities called their UASI-funded initiative “Project Shield,” which was supposed to provide municipalities with the equipment to improve response to terrorist attacks and disasters.

Under the plan this was supposed to be accomplished, in part, by equipping police in dozens of departments with vehicles capable of mobile data transmission of video, audio and text as well as a tower camera. The information, including feed pictures from fixed mounted cameras, was to be shared among 128 suburban agencies in case of a terrorist attack or other emergency.

Instead investigators who compiled the report after conducting a six-month probe found that a lot of the sophisticated electronic equipment didn’t even work, was missing or was never installed. They concluded that the project was “not implemented effectively” and found that “millions of tax dollars may have been wasted on equipment that does not perform as intended.”

The IG further reveals that the federal funds were not always used appropriately and that Cook County was “not always in compliance with federal regulations, agency administrative requirements and relevant Office of Management and Budget circulars.” That’s because the feds kept pouring money into the initiative without bothering to follow up if it was being properly used.

While this particular audit focused on Cook County, it’s not far-fetched to assume that some of this is going on with other urban recipients of these federal funds. After all, there is no oversight once the cash is doled out. The Cook County probe was conducted only because two federal lawmakers from the state—Republican Senator Mark Kirk and Democrat Congressman Mike Quigley—requested it.